The head of the largest umbrella group of business organizations representing some 30,000 large and micro, small and medium enterprises (MSMEs) across the country has sought the immediate congressional passage of the proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), to give the Philippines a "fighting chance" in attracting more foreign direct investments (FDIs) under the “new normal.”
Philippine Chamber of Commerce and Industry (PCCI) president Benedicto Yujuico said the revisions to the original Corporate Income Tax and Incentives Rationalization Act (CITIRA), which is now known as the CREATE bill, will boost the recovery of firms reeling from the economic slowdown spawned by the coronavirus crisis.
During a recent virtual meeting of local and foreign business groups held via Zoom, Yujuico said the immediate reduction of the corporate income tax (CIT) from 30 percent to 25 percent will bring the country’s rate closer to the ASEAN average, and help “draw in multinational firms seeking alternative sourcing markets and manufacturing base."
“The damage COVID-19 and the corresponding lockdown imposed to mitigate its spread has seriously damaged the economy. The business sector needs the package of reforms introduced under CREATE to help businesses recover, ensure their resilience and create more sustainable economic opportunities,” Yujuico said.
“We therefore call on the Senate and the House of Representatives to accelerate the enactment of the law,” he added.
The PCCI’s membership roster includes private companies and enterprises, industry associations, local chambers of commerce and foundations operating in the Philippines.
Most of these member-companies are MSMEs that represent different areas of activities such as export and import, manufacturing and processing, distribution and logistics, among others.
In its statement of support for the CREATE bill, the PCCI also backed the bill’s provisions on extending the net operating loss carryover (NOLCO) for businesses from the current 3 years to 5 years, for losses incurred in 2020; lengthening the maximum sunset period for current incentive recipients from 2 to 7 years to 4 to 9 years; and providing flexible authority to the Fiscal Incentives Review Board (FIRB) and the President in granting both fiscal and non-fiscal incentives to investors.
“Including more flexibility in granting fiscal and non-fiscal incentives will be critical as the country competes internationally for high-value investments. We support the proposed strategic, tailored approach to attracting potential investments that are uniquely deserving of incentives,” the PCCI said in its statement.
Meanwhile, Nabil Francis, the president of the European Chamber of Commerce in the Philippines (ECCP) and CEO of Republic Cement Services Inc. said at the same virtual meeting that the Philippines has “to act decisively” in restarting the economy with strict safety and health protocols in place to help businesses survive.
He said the CREATE bill is “in the right direction,” and is essential for the Philippine economy to bounce back from the impact of the COVID-19 contagion.
“We are applauding the reduction of the CIT down to 25 percent,” Francis said, as he suggested that the Congress expedite the process of lowering the tax even faster to 20 percent by 2025.
Francis said the ECCP will continue to support the government as it wants the Philippines to be a magnet for investments in the region.
“Together we can really help the Philippines to realize a better future and I do believe we will emerge stronger together from this crisis,” Francis said.
He welcomed the government’s move to resume the implementation of the "Build, Build, Build” infrastructure program as a “driver of growth,” and urged the swift passage of the other economic reform measures pending in the Congress, such as the amendments to the Public Service Act, the Foreign Investments Act and the Retail Trade Act.
The PCCI and ECCP were among the organizations that have expressed their support for the CREATE bill during the virtual meeting of local and foreign business groups held last Thursday via Zoom.
A total of 32 local and foreign business organizations have called on the Congress to act "quickly and decisively" in restoring market confidence and providing the “most direct, cost-efficient and instant relief” to enterprises suffering from the coronavirus pandemic's economic fallout by passing the CREATE bill before its sine die adjournment next week.
In a joint manifesto, these groups representing a broad spectrum of small, medium and large businesses and professions in the country told lawmakers any further delay in the CREATE bill's approval would lead to the loss of more jobs and investments.
These organizations noted that the immediate reduction in the CIT rate from 30 percent to 25 percent by July translates into a “direct infusion of financial assistance to businesses, giving them more resources to retain employees and to keep up with financial difficulties.”
Their manifesto of support was presented online to Finance Secretary Carlos Dominguez III, who then thanked the business organizations for their support for the CREATE bill.
Aside from PCCI and ECCP, the other organizations supporting the CREATE bill include the Federation of Filipino-Chinese Chambers of Commerce & Industry, Inc. (FFCCCII), FINEX, Philippine Center for Entrepreneurship (Go Negosyo), Management Association of the Philippines (MAP), Philippine Council of Associations and Association Executives (PCAAE), Rural Bankers Association of the Philippines (RBAP), Shareholders Association of the Philippines (SharePHIL), Tax Management Association of the Philippines (TMAP), Alyansa Agrikultura, Bankers Association of the Philippines (BAP), Foundation for Economic Freedom (FEF), National Real Estate Association (NREA), Philippine Retailers Association (PRA) and the Philippine Hotel Owners Association Inc. (PHOA).